Trading glossary
New to trading or need a refresher? Explore common trading terms you’ll encounter when using MetaMask’s trading features. This list will be updated as new features and terms are introduced.
Market basics
| Term | Definition |
|---|---|
| Spot price | The current market price of an asset for immediate execution |
| PnL (Profit & Loss) | Shorthand for your profit or loss on a position |
| Spread | The difference between the highest price someone is willing to buy (bid) and the lowest price someone is willing to sell (ask). Tighter spreads usually mean more liquid markets |
| Slippage | The difference between the expected price of a trade and the price it actually executes at. Slippage is common in fast or low-liquidity markets |
| Liquidity | How easily an asset can be bought or sold without moving its price too much. High liquidity = easier, smoother trades |
| Volatility | How much and how quickly the price of an asset moves up or down. Crypto markets tend to be more volatile than, say, stock markets |
| Blue-chip | Well-established assets with high liquidity and large market caps (e.g., ETH, BTC) |
| Long-tail | Smaller, niche assets with low trading volume and liquidity. Riskier to trade due to higher slippage and volatility |
| Bullish | A sentiment expecting prices to rise |
| Bearish | A sentiment expecting prices to fall |
| Hawkish | A policy stance that favors tighter monetary conditions (e.g., higher interest rates), usually seen as negative for assets like crypto |
| Dovish | A policy stance that favors looser monetary conditions (e.g., lower interest rates), usually seen as positive for assets like crypto |
Trading positions
| Term | Definition |
|---|---|
| Long | Direction you take if you're betting on the price going up |
| Short | Direction you take if you're betting on the price going down |
| Leverage | A multiplier on your capital, amplifying gains and losses. Leverage is a key feature of perp trading that allows you to control larger positions. Learn more here |
| Margin | The amount of collateral you put up to open a trade |
| Order size | Your total position size on a trade calculated as (margin × leverage) |
| Notional value | The total value of your position. It represents the full trade size you're controlling, not just the margin you put up. Example: $1,000 margin at 10× leverage = $10,000 notional value |
| Maintenance margin | The minimum amount of margin you must keep to hold a position open. If your balance falls below this, your position will be liquidated |
| Liquidation | The point at which your equity falls below requirements and your position is closed automatically to prevent further losses |
| Hedging | Opening a position designed to offset potential losses in another position. Also known as risk management with assets |
Orders and Execution
| Term | Definition |
|---|---|
| Market order | An order to buy or sell immediately at the current market price. Fast, but may result in slippage |
| Limit order | An order to buy or sell at a specific price or better. Offers more control, but may not fill if the market never reaches that price |
| Stop loss | A price parameter where the position auto-closes to limit losses. Note: may not execute at the exact price in fast or illiquid markets |
| Take profit | A price parameter where the position auto-closes in profit. Note: may not execute at the exact price in fast or illiquid markets |
| Entry Price | The average price at which your position was opened |
| Position Size | In tokens: the quantity of tokens you're long or short; In currency: the total notional value of your position |
Derivatives & Metrics
| Term | Definition |
|---|---|
| Perps | Short for perpetual futures. A type of derivative trading with no expiration date, letting you speculate on price movements indefinitely |
| Derivatives | Financial contracts whose value comes from an underlying asset (e.g., tokens, commodities, indexes). Perps and futures are common types |
| Funding rate | A periodic payment between long and short traders to keep perp prices aligned with spot prices. Funding can be positive (longs pay shorts) or negative (shorts pay longs) |
| ROI | Return on investment. How much you made or lost on a trade relative to the amount you put in |
| Unrealized PnL | Profit or loss on an open position that fluctuates with the market |
| Realized PnL | Profit or loss locked in after closing a position |
| Open Interest | The total number of outstanding contracts (longs + shorts) in a market. High open interest often means high activity and liquidity |